AI Structured Summary
Not yet generated for this judgment
Judgment
Brijesh Sethi, Chairperson
Vide this order I shall dispose of an appeal filed against the impugned order dt. 23.04.2019 passed by the Ld. DRT, Jaipur. Vide the said order, the Ld. DRT has held that Section 13 (2) Notice of the SARFAESI Act dt. 16.03.2015, issued by the appellant bank, could not have been withdrawn. Impugned order runs as follows:-
“Present:
Shri R.K. Salecha, Counsel for the Applicant
Shri Mahip Datta, Counsel for the Respondent Bank
FINAL ORDER
23.04.2019
Present SA was filed by the SA applicant on 26.08.16 against the respondents, Kotak Mahindra Bank, its Authorised Officer, The District collector and Magistrate, Alwar and Tehsildar, Alwar.
In the SA, the applicant challenged the notice issued by the Kotak Mahindra Bank, Alwar (hereinafter referred as Bank) u/s 13 (2) of the SARFESAI Act on 16.03.15.
The said notice dated 16.03.2015 is on record and filed by the applicant along with SA, as Annexure A-7.
As per said notice total amount against over draft and term loan Rs. 1650.00 Lacs were funded to the applicant's educational trust. At page No. 3 of this notice the amount as shown outstanding is Rs. 5,12,47,587.34 and the same was payable within 60 days from the date of issue of notice u/s 13 (2) of the Act.
Notice u/s 13 (2) dated 16.03.15 is detailed one, running into four pages, having IV annexure, showing outstanding of Rs. 3,08,09,218.34 as on 16.02.15 against Term Loan, Rs. 61,31,343.00 outstanding amount for overdraft Account of Alwar Management Studies as on 16.02.15 Rs. 71,53,513/-outstanding amount for overdraft account of Alwar Pharmacy College as on 16.02.15 and Rs. 71,53,513/- outstanding amount for overdraft account IET Biotechnology Institute as on 16.02.15.
Total amount of all the details given in IV annexure's comes to Rs. 5,12,47,587.34. The details of outstanding amount is very clear in the notice dated 16.03.15 issued u/s 13(2) of the SARFESAI Act and do not show prima facie any illegality.
As per SA applicant this notice u/s 13(2) of the Act, a representation dated 23.03.15 at annexure A-9 (page no. 96) was forwarded to the respondent Bank.
Ld. counsel Sh. Mahip Datta pointed out that the said representation was not received by the respondent Bank.
As per SA applicant, the respondent bank sent a notice u/s 13(4) of SARFAESAI Act on 17.12.2015 and the same is at Annexure A-10.
The respondent bank moved an application dated 30.09.15 before the court of District Collector and Magistrate, Alwar, which is at Annexure A-13 and DM Alwar passed an order of 26.10.15 u/s 14 of the SARFESAI Act.
Perusal of the application filed by the respondent Bank and the order of DM, Alwar dated 26.10.15 goes to show that the amount as outstanding was shown Rs. 5,12,47,587.34, this fact clearly shows that from the issuance of notice issued u/s 13(2) of the Act dated 16.03.15 and till 26.10.15 (about seven months), bank there was nothing wrong in the notice u/s 13(2) of the Act.
The SA was tiled on 26.08.16. Ld. Counsel Sh. Mahip Datta, appeared behalf of the respondent Bank on 04.03.16 and again on 23.03.16.
On 23.03.16, my Ld. Predecessor passed an order to not to take any coercive step, if the applicant deposit Rs. 50 lacs by 31.03.16 and Rs. 1.00 crore on or before 31.04.16.
Again it is clear that till this date i.e. on 23.03.16, after about a year from the notice u/s 13(2) dated 16.03.15, nothing wrong was pointed out by the respondent Bank.
On 27.05.16, it was informed that an amount of Rs. 1.50 crores were deposited by the applicant and till this date nothing was informed by the respondent Bank for withdrawal of notice u/s 13(2) of the Act.
On 16.02.17 before this tribunal it was for the first time when respondent Bank informed that the bank is going to withdraw the demand notice u/s 13(2) of the SARFESAI Act.
The order sheet dated 16.02.17 is reproduced hereunder:-
"Ld. Counsel for the Respondent Bank submits that Bank is going to withdraw the Demand Notice u/s 13(2) of the SARFESAI Act 2002.
Respondent Bank is directed to file an affidavit of the Authorised officer regarding this submission. List the matter on 07.03.17."
On 18.03.17, authorized officer filed an affidavit for withdrawal of notice u/s 13(2) of the SARFESAI Act, 2002.
Perused affidavit filed by the Authorised officer of the Respondent Bank on 18.03.17 and pars 2 & 3 is reproduced as under:-
Para 2 "That the account of the applicant was classified as NPA and notices under section 13(2) of SARFESAI Act, 2002 was issued on 16.03.15. However, inadvertently the amount demanded in the notice under section 13(2) of SARFAESAI Act was mentioned wrongly."
Para 3 "That without prejudice to the rights and contentions available to the applicant bank under the law the notice dated 16.03.15 u/s 13(2) of SARFESAI Act is being withdrawn".
So, it is clear that it took a time of two years to the respondent bank to withdraw the notice u/s 13(2) of the Act i.e. date of issue 16.03.15 and date of withdraw is 18.03.15.
It was at the time of argument when Ld. Counsel Sh. Mahip Datta informed that a fresh notice 13(2) of the Act has been issued by the respondent bank.
Once again it is made clear that the respondent Bank even did not tried to produce copy of fresh notice u/s 13(2) issued by the bank, so the date, in respect of the notice u/s 13(2) of the Act is not clear.
Ld. Counsel of the applicant argued and prayed to grant relief as prayed in para 6.1, 6.2, 6.3, 6.4 & 6.5 may be granted.
In brief Ld. Counsel prayed to quash and set aside the possession notice dated 20.08.15 in respect of having taken symbolic possession, to quash and set aside the order dated 26.10.15 passed by DM. Alwar, to restore possession of the said property, to adjudicate the amount with relation to interest, penal interest and other charges as mentioned in notice dated 16.03.15 and also to pass an order for compensation of Rs. 200 lacs in view of the fact that the proceedings of having taken possession of the said property and creating' chaotic situation arising out of the recourse by Respondent No. 4 having been / taken to have the actual possession of the assets and with a view to safeguard the interest of the students of teaching staff the SA applicant society had to instantly arrange financial resources to the extent of Rs. 100 lac and even thereafter without giving any clarification about charge of the interest, penal interest and other charges, continuing to threat the office bearers of the society about unpleasant consequences and the embracement loss of reputation suffered by the society and the action taken to destabilize the functional college
Ld. Counsel of the respondent Bank argued that as the notice u/s 13(2) of the act dated 16.03.15 was withdraw and an affidavit has already been filed on 18.03.15 by authorized officer of the bank, so nothing remains in respect of notice u/s 13(2) of the SARFESAI Act and Ld. Counsel Sh. Mahip Data argued and prayed that the SA is now liable to be dismissed.
Ld. Counsel also argued that there was no need to give anything in writing in respect of withdrawal of the notice u/s 13(2) of SARFESAI Act.
Ld. Counsel of respondent Bank placed reliance on the following decisions, and after having a thoughtful consideration following are my observation:-
Case decided by Hon'ble Court of Judicature for Rajasthan at Jodhpur dated 13.04.15 passed in SB Civil Writ Petition No. 11538/2013 is referred by Ld. Counsel of respondent Bank and he referred para 18 of the Judgment. As per fact of the present case credit facilities were not extended by Respondent Bank on default of repayment of outstanding dues and so fresh actions u/s 13(2) of the Act were allowed.
In my considered opinion the facts of this case and the case in hand do not match and so, the respondent Bank do not get any benefit from this Judgment. Another Judgment passed by Hon'ble High Court of Calcutta dated 02.09.10 also do not help the arguments of Ld. Counsel of respondent Bank, because in the present case the respondent Bank even did not took pain to place on record at least copy of another notice issued u/s 13(2) of the Act on second time. Still even this Tribunal is not aware about the date of issue of second/fresh notice u/s 13(2) of the Act.
One more judgment passed by Hon'ble High Court of Chhattisgarh, passed on 05.11.08 also do not help to the respondent Bank, because in the present case there is no information is brought on record that second notice u/s 13(20) of the Act is issued as the effect of first notice in shape of taking symbolic possession has not been cancelled or taken back by the bank till today.
After having gone through all the facts and judgments of the Hon'ble Courts I am of the view that as still the respondent Bank has not given any intimation to the applicant (borrower) in respect of being withdrawn of notice u/s 13(2) of the Act dated 16.03.15, though the intimation has been mentioned in affidavit dated 18.03.18 only.
Still there is no documentary evidence on record to show that any letter showing withdrawal of notice u/s 13(2) of the Act dated 16.03.15 was issued, so it is clear that the notice u/s 13(2) of the Act is still in force.
Meanwhile the SA applicant preferred an appeal No. 76/18 before the Hon'ble DRAT, New Delhi and vide order dated 10.10.18 the matter was remanded back to this Tribunal with a direction for fresh dispose of this SA in accordance with law. The order was passed, based on joint request and Ld. Chairperson, DRAT, New Delhi observed that "but this Tribunal is also of the view that the appellant's SA could not have been disposed of in the manner in which it has been done."
The respondent Bank filed a DB Civil Special Appeal (Writ) No. 1028/2018 before the Hon'ble High Court at Jaipur and by order dated 03.04.19 it was directed to this DRT to dispose of SA No. 27/16 before it following the remand order dated 10.10.18 passed by DRAT, New Delhi. A time limit of two weeks was decided by the Hon'ble High Court in the said order.
Perusal of the said order of the Hon'ble High Court reflects the date of notice issued u/s 13(2) of the SARFESAI Act as 01.12.2018. As discussed earlier, said notice is not on record and as per order of Hon’ble High Court the SA No. 27/16 is to be decided, so the matter is being kept up to the subject matter of SA and as per direction of Hon'ble DRAT, New Delhi dated 10.10.2018.
On the basis of alive said discussion and perusal of records it is necessary to decide the following issues:-1. Whether the notice u/s 13(2) of the SARFESAI Act of 2002 is a complete notice as per requirement or not ?
Whether such notice u/s 13(2) of the dated 16.03.2019 has ever been withdrawn by the bank?
If the answer of issue No. 2, is yes, then how it was withdrawn?
So, far as the details of notice u/s 13(2) of the Act of 2002, as discussed earlier I am of the considered view that the notice dated 16.03.15 is a detailed notice having all the required details and there is no illegality in the said notice.
Accordingly, it is clear that the notice U/s 13(2) of the Act is a valid notice and is still in existence as withdrawal of the said notice is not proved.
So far as the question of withdrawal of notice u/s 13(2) of the Act dated 16.03.15 is concern, I am of the considered view that the bank never informed to the applicant in respect of any information regarding withdrawal of said notice. The only evidence available on the record is in the shape of Affidavit filed on 18.03.17 by the Authorised Officer of the Bank and pars 2 & 3 of this affidavit states about the fact that "Notice issued u/s 13(2) of the Act dated 16.03.15 is being withdrawn." The affidavit filed on 18.03.17 is having three paragraphs and para 2 indicate the reason of withdrawal of notice u/s 13(2) and I am of the view that SARFAESI Act do not allow such kind of withdrawal, so the withdrawal is not legal and it seems that the bank filed this affidavit without following the norms or law, as no intimation was given to the SA applicant.
As discussed in the above para, I am of the view that such type of withdrawal of notice is not legal, I am of the considered view that even till the slate of argument the Ld. Counsel of the bank could not produce any documentary evidence, which can prove that the SA applicant was ever informed about the withdrawal of the notice issued u/s 13(2) of the Act dated 16.03.15 along with the reasons, for doing so.
Accordingly it is clear that the notice u/s 13(2) of the Act dated 16.03.15 was not legally withdrawn and is still in existence.
Ld. Counsel argued that as per provisions of section 13 (3-A) the representation against the notice u/s 13(2) of the Act has not been decided by the Bank. As the receipt of such representation has already been challenged and there is no evidence to show that the representation was received by the respondent bank at any point of time.
Ld. Counsel of the Applicant argued that an amount of Rs. 1,90,00,000/- were deposited till 23.02.16 against outstanding amount and an amount of Rs. 1,50,00,000/-, Rs. 25,00,000/-were deposited. So a total amount of Rs. 3,65,00,000/- have been deposited, against outstanding of Rs. 5,12,47,587.34.
I am of the view that about 70% amounts against the amount reflected in the notice u/s 13(2) of the Act has been deposited by the applicant
Ld. Counsel of the SA applicant argued that the respondent took symbolic possession of the properties on 17.12.16 through notice at Annexure A-10. Possession Notice as per Rule 8(1) of the Security Interest (Enforcement) Rules, 2002 at Annexure A-12 was published in two daily news papers.
Ld. Counsel of the applicant argued that the bank issued notice u/s 13(2) of the Act on 16.03.15 steps regarding symbolic possession were taken on 17.12.16 and till this time the bank never gave any information with regard to withdrawal of the notice u/s 13(2) dated 16.03.15, but on account of these illegal acts created chaotic situation, unpleasant consequences, embracement, loss of reputation etc. were suffered by the applicant.
I have given a thoughtful consideration to all the facts and documents and of the view that the respondent Bank failed to produce any evidence on record to prove that any information in respect of withdrawal of notice u/s 13(2) of the Act, 2002, dated 16.03.15 was given to SA applicant till the time, when another/fresh notice u/s 13(2) was issued, if any
Respondent Bank did not even took any step to produce any document to show that notice u/s 13(2) of the Act dated 16.03.15, has been withdrawn except the affidavit only.
During argument it is informed that fresh notice u/s 13(2) of the act has been issued, but the withdrawal of the notice u/s 13(2) dated 16.03.15 is not proved.
It is also clear that the respondent bank took very careless approach while dealing with the proceedings u/s 13(2) of the Act and other provisions of the SARFESAI Act, on account of which it is a fact that the applicant suffered unpleasant consequences, embarrassment and might have suffered loss of reputation also, being-an educational institution.
Again it is important to mention here that the applicant already deposited about 70% amount and up to a great extent this shows that the applicant is not a willful defaulter
Accordingly all the action taken by the respondent bank after the issuance of notice u/s 13(2) of the SARFESAI Act dated 16.03.15 are held illegal are quashed and set aside.
Accordingly the DM order dated 26.10.15 is quashed and set aside and the respondent bank is directed to restore the possession in favour of the SA applicant with immediate effect.
I am of the view that the applicant is entitle to get compensation on the following three grounds:-
Fee of Rs. 1,00,000/- deposited while filing SA and the respondent bank took all efforts to prove the SA infractuous for the reasons, for which the bank itself is liable. So the bank is directed to pay Rs. 1,00,000/- to the SA applicant.
The applicant engaged in litigation and since last 3 years the SA is pending on account of fault of the bank, so in my opinion the applicant is entitled to get Rs. 1,00,000/- as compensation against the legal charges.
As ld. counsel, during arguments, referred section 19 of the SARFESAI Act and prayed for compensation of Rs. 200 lacs. After having gone through the provisions of section 19 of the SARFESAI Act, I am of the view that the applicant is entitled to get compensation and cost from the bank as the act of symbolic possession and publication of such notice in news papers definitely would have caused a situation like of deformation of an educational institution. The proceedings of section 14 have already been held illegal, so the bank is directed to pay Rs. 15,00,000/- as compensation and cost of the SA applicant within 30 days of this order.
With these observations the SA is disposed off. Copy of the order be given free to the concerned parties.
Put up on 24.05.2019 for compliance.
(Vivek Saxena)”
Ld. Sr. Counsel for the appellant has submitted that the present order is not in accordance with law. According to him Section 13 (2) Notice issued by the Bank can be withdrawn by it at any stage and there is no bar to this effect in the SARFAESI Act.
Ld. Sr. Counsel for the appellant has further submitted that Section 13 (2) notice was withdrawn by the Bank on 22. 12.2017 and order dt. 22.12.2017 reflecting the same runs as follows:-
“Dt. 22.12.2017
Present:
Shri R.K. Salecha, counsel for appellant.
Shri Pranav, counsel for respondent bank.
Authorized representative of the bank present and represented with SK and presents withdrawn and the cause of action for SA does not survive. Liberty is given to bank to proceed afresh.
Copy of the order be given free of cost to the parties.
File be placed before the Registrar for compliance. After Compliance file be consigned to record.”
The above order was challenged by the Ld. Counsel for the respondent before the Ld. Predecessor of this Tribunal and vide order dt. 10.10.2018, the Tribunal had remanded back the said order with the observation that though order is remanded back with the consent of the parties but since it is cryptic order, the Ld. PO, DRT, Jaipur should dispose of the application vide a detailed order. The order dated 10.10.2018 runs as follows:-
“10.10.2018
Present: Mr. R.K. Salecha, counsel for appellant.
Mr. Mahip Datta Parashar and Ms. Sanya Lamba, counsel for respondent bank.
Counsel for the appellant has made a deposit of Rs.10 lacs in compliance of the directions given on the last date of hearing. Now, appeal shall be entertained and heard on merit.
The learned counsel for the appellant submits that despite the fact that respondent bank had submitted an affidavit before the DRT informing it that the impugned demand notice under Section 13(2) of the SARFAESI Act had been withdrawn, the learned DRT should not have wrapped up the S.A. proceedings in the manner in which it has been done by passing the following cryptic order on 22.12.2017.
"Authorized representative of the bank present and represented with SK and presents withdrawn and the cause of action for SA does not survive. Liberty is given to bank to proceed afresh.
Copy of the order be given free of cost to the parties.
File he placed before the Registrar for compliance. After compliance filed be consigned to record."
Counsel further submits that since the appellant had sought adjudication of its grievances by filing 'a securitization application under Section 17(1) of the SARFAESI Act and challenge to the demand notice was only one of his grievances, the DRT should not have given liberty to the bank to proceed afresh. To this, the response of the learned counsel for the bank is that the bank can always withdraw its demand notice and it does not require any liberty from the DRT to issue a fresh demand notice.
Today, after some hearing had taken place, both sides submit that the impugned order can be set aside and the matter can be remanded back to the DRT for passing a fresh order in accordance with law once again taking into consideration the statement which already stood made before it on behalf of the bank that it had withdrawn its notice under Section 13(2) of the Act, which was also the subject matter of challenge in appellant's S.A., and then to take up the amendment application which also stood filed on behalf of the appellant in view of the withdrawal of the 13(2)-notice, for which a separate affidavit has also been filed of the bank officer. The learned counsel for the bank, however, submits that since already a fresh 13(2)-notice stands served upon the appellant, it may, however, be clarified that remand of this matter to the DRT will not have any impact on the fresh notice which already stands issued by the bank, since the appellant has already approached 'the Hon'ble Rajasthan High Court (Jaipur Bench) with a writ petition (No.6843/2018) challenging the very issuance of the 13(2)-notice.
In view of the aforesaid joint submissions for remand of the matter, this appeal is disposed of by setting aside the impugned order and the matter is remanded back to the DRT for fresh disposal of the S.A. in accordance with law. It would be open to both the parties to urge any point before the DRT and the DRT will be at liberty to take any decision in accordance with law. This order of remand is being passed not only because of the joint prayer having been made from both the sides, but Tribunal is also of the view that the appellant's S.A. could not have been of in the manner in which it has been done.
It is, however, clarified that this order of remand will have no impact on the fresh demand notice which the bank is stated to have issued, since the legality and validity of 13(2) notice already stands challenged before Jaipur Bench of the Hon'ble Rajasthan High Court in a writ petition (No.6843/2018) filed by the appellant.
The matter shall now be taken up by DRT for further appropriate direction on 12.11.2018 at 10 a.m., by which time I am informed that a regular Presiding Officer Would join the DRT, Jaipur.
Record of the DRT he sent back forthwith along with a copy of this order.
Copy of the order be give dasti to both the parties.
Ld. Counsel for the appellant has submitted that, thereafter, a detailed order was passed by the Ld. PO, DRT, Jaipur on 15.04.2019 and the vide the said order, amendment application filed by the Ld. Counsel for the respondent and application under Order 7 Rule 11 CPC filed by the appellant Bank, were disallowed with the liberty to raise the submissions/ objections at the time of final disposal/ final hearing. The order runs as follows:-
“Present:
Shri R.K. Salecha, Counsel for the Applicant.
None is present for the Respondent Bank.
FINAL ORDER
(15.04.2019)
The present matter is taken up for early hearing in compliance of the order of Hon’ble High Court at Jaipur passed on 03.04.2019 in DB Special Appeal Writ no. 1028/2018 Filed by Kotak Mahindra Bank (hereinafter referred as Banks) against the SA applicant “All India Society for Advance Education and Research) Alwar, Rajasthan.
It has been directed by the Hon’ble High Court that the SA be decided within a period of two weeks after receipts of the copy of the order dated 03.04.2019. The certified copy of the said order dt. 03.04.2019 was received by this Tribunal on 05.04.2019and the placed before me on 05.04.2019 i.e. same day.
Accordingly notices were issued to both the parties on 05.04.2019 and they were directed to argue the matter finally on 11-04-2019.
Ld. Counsel Sh. R.K. Salecha appeared on behalf of SA applicant and prayed that on I.A. no 805/2018 filed by the bank is to be decided before passing any final order on the SA. Sh.
R.K. Salecha also prayed that one IA No. 165/2017 filed on 27- 04-2017 is also to be decided before passing any final order.
Both the counsels agree to argue on the I.A. no. 805/2018 filed by the bank and I.A. no.165/2017 filed by S.A. applicant.
Perused the I A.no 805/2018 filed on 05-12-2018 in which the bank has prayed for dismissal of the instant OA for want of cause of action.
Reply of the IA No 805/2018 is not filed by SA applicant.
Heard Arguments.
After having gone through the entire facts of I.A.no 805/2018, I am of the view that the facts as mentioned therein are required to be heard at the time of hearing final argument of SA. The bank prayed for the dismissal of SA on the ground that the notice U/S 13(2) of the SARFAESI, Act, dated 16-03-2015 which was issued showing the figure of amount of Rs. 5,12,47,587.34 was withdraw by them on account of the fact that inadvertently the amount demanded in the said notice was mentioned less compared to actual outstanding as some of the facilities details could not be captured properly due to inadvertent mistake and so a wrong demand was mentioned in the notice dated 16-03-2015 issued u/s 13(2) of SARFAESI, Act. Reply to this IA filed by applicant on 11-04-2019 is on record.
I am also of the view that the whole controversy raised in the present SA is related to the notice issued u/s 13(2) of the Act by the bank on 16-03-2015 and then withdrawal of the same. The subject matter of the SA is the said notice dated 16- 03-2015 and so I am of the considered view that the IA No 805/2018 will be decided at the time of hearing of final hearing and accordingly both the counsels are at liberty to argue on this IA during advancing final argument.
Ld. Counsel Sh. R.K. Salecha prayed that I.A.no 165/2017 filed by the applicant on 22-04-2017 may also be heard.
Ld. Counsel Sh. Mahip Datta, appearing on behalf of the bank informed to this Tribunal that he has not still received the copy of IA No 165/2017 and so is not aware with the facts and prayer of I.A.no 165/2017 . Perused the order sheet dated 27-04-2017 signed by Registrar, DRT, Jaipur and found that there is a hand written entry on the right hand side margin in respect filing of counter affidavit and IA No 165/2017. The order sheet don’t reflect these facts,
It is important to mention here that on 18-03-2017 the matter was put up before my Ld. Predecessor who was holding charge of DRT Jaipur. Both the Ld. Counsel s were present and Sh. Mahip Datta, Ld. Counsel of the bank informed to the Tribunal that the bank has filed an additional affidavit for withdrawal of notice u/s 13(2) of the SARFAESI, Act .
Ld. Counsel of the SA applicant sought time to seek instructions from his client and so the matter was fixed on 24-07-2017, 27-04-2017, 26-05- 2017, 05-07-2017 & 16-08-2017 none appeared on behalf of the applicant bank.
On 16-09-2017 proxy counsel appeared on behalf of the SA applicant and Sh. Mahip Datta Ld. Counsel of the bank before LD. Predecessor who held camp at Jaipur but the Ld. counsel of the SA applicant did not took any step to inform that the IA no 165/2017 filed by them on 27-04-2017 is pending for hearing. Both the counsels sought adjournment but for what purpose is not clear. This shows that the approach of Ld. Counsels of the parties that how much they were serious in the hearing of present matter.
Perused the order sheet dated 22-12-2017 passed by my Ld. Predecessor in which following order was passed on that day:-“Authorized representative of the bank present and represented with SK and presents withdrawn and the cause of action for S.A. does not survive. Liberty is given to bank to proceed afresh.”
Perusal of the order sheet dated 22-12-2017 shows that Ld. counsel Sh. R.K.Salecha did not informed to the Tribunal about filing of the IA No. 165/2017 and so this facts shows that the SA applicant was not serious at all towards the hearing of IA No 165/2017 filed by him and was not at all interested for any order in respect of prayer made by him in the SA.
As the Registry also failed to point out any reference in respect of filing of the IA No. 165/2017 on 18-12-2017 and so there was no reference about the filing of the present IA in any of the order of Registrar dated 27-04-2017, 26-05-2017, 05-07- 2017, 16-08-2017, 27-10-2017 and 26-11-2017.
Separate show cause notice is being issued in this reference for taking proper action on account of this failure of Registry.
Perused the facts as mentioned in the IA No. 165/2017 and found that the same was filed with a prayer to allowed the applicant to amend the the SA. The grounds on which the amendment is sought are reproduced here in under:-
“5.19 A That during the course of proceedings on 17.04.2017 the affidavit appearing to be dated as 07.03.2017 of Mr. N.K. Ahuja claiming to be the authorized officer of respondent bank was filed which, inter-alia, contained the fact that the Notice under section 13 (2) of SARFAESI, Act, 2002 issued on 16.03.2015 had mentioned the amount demanded
“wrongly” and hence without prejudice to rights and contentions available to the applicant bank under the law, Notice dated 16.03.2015 under Section 13 (2) of SARFAESI, Act, 2002 is being withdrawn.”
In the ground after Para no. (1) the following is to be added:-
ia. For the ex-pate expression of the Respondent bank per affidavit dated 07.03.2017 of some Mr. N.K. Ahuja S/o Shri H.R. Ahuja claiming to be Authorized Officer is not tenable eventually on the ground that the basis on which he has held out and deposed to be Authorized officer of the respondent bank has not been established with the reliable credentials and further once the Notice under Section 13 (2)on 16.03.2015 was issued, the reply was filed, it is not open for the respondent to withdraw the Notice on the ground that the amount stated in Demand Notice was “wrongly” mentioned and the same is precluded to be done as the S.A. applicant which is “dominus litus” and sought one of the relief by way of adjudication of the outstanding amount which is subject matter of pleading by both the parties is not permissible to be withdrawn.
ib. For that it is impermissible to the respondent bank at same time blow hot and cold and it is sated that by holding out to withdraw the Notice dated 16.03.2015, the S.A. applicant, without wholesome adjudication of the controversies which has been raised in the present S.A., cannot claim that the said purported withdrawal is without prejudice to the rights and contentions available to the respondent bank and it is sated that such assertion which is contrary to established principles of law shall only result into a speculative situation and multiplicity of litigation which cannot be permitted.
ic. For the vide the expression contained in Affidavit dated 07.03.2017 maifestly establishes that the Respondent bank and it authorized officer has acted in a blatantly negligent and perverse manner and subjected the S.A. applicant Society and the financial position of the Society and its operational educational institution to the worst agony and has played with the fate and fortunes of hundreds of students in this respect the amount of Rs. 200.00 lac compensation has been demanded by the S.A. applicant and besides other issues the same is required to be adjudicated by the Ld. Tribunal and it is respectfully submitted that in facts and circumstances while the Hon’ble Tribunals is to adjudicate al the controversies raised in the S.A. in a wholesome manner.
In the relief sought, after Para no. 6.4 following prayer is to be added:-
“6.4A In respect of the facts that vide affidavit dated 04.03.2017 filed by the Respondent bank through the purported Authorized office about withdrawal of the notice dated 16.03.2015 issued under Section 13 (2) of SARFAESI, Act, 2002 not to allow such withdrawal and to adjudicate the outstanding amount in the account which are held out to be maintained by the S.A. applicant with the respondent bank.” After having gone through the entire facts and having heard argument on behalf the Ld. Counsel, I am of the view that the grounds on which the S.A. applicant want to argue the points he can raised these facts during the course of final arguments.
As the applicant remained silent and never argued on the present I.A. after filing of the same and now on 11.04.2015 insisted to hear and pass an order even after knowing the fact that the Hon’ble High Court passed an order on 03.04.2015 to dispose the present S.A. within two seeks time, shows that the S.A. applicant still wants to linger the matter. Accordingly, the prayer in respect of Para 3 A,b is dismissed with the liberty that applicant can raise these issue during the course of final arguments.
As per request of S.A. applicant in the clause of prayer is to be added, the S.A. applicant prayed that the withdrawal of S.A. in the light of Affidavit dt. 04.03.2017 by authorized officer may not be allowed. The S.A. applicant further prayed to add the prayer that this Tribunal may adjudicate the outstanding amount in the accounts which are held to be maintained by the S.A. applicant with the respondent bank.
After having heard on this ground, I am of the view that this Tribunal is having jurisdiction to decide the illegality off any action taken by the Respondent bank under SARFAESI, Act, but so far the question of adjudication of the amount, I am of the considered view that as the notice u/s 13 (2) of the Act, dt. 16.03.2015 has already been withdrawn and the details of any further notice u/s 13 (2) of the Act, is not on record so it is not possible for this Tribunal to adjudicate any amount.
Accordingly, the prayer to add the prayer as mentioned in Para 6.4A is not liable to be allowed and so the same is dismissed.
Once again it is made clear to both the parties that the S.A. is to be decided till 23.04.2019 as per guidelines of Hon’ble High Court dt. 03.04.2019 and so the parties are hereby directed to argue the S.A. on 18.04.2019 without fail and any prayer of adjournment, can attract heavy cost.
Copy of the order be given “DASTI” to the parties.”
Ld. Sr. Counsel for the appellant has submitted that, thereafter, the final order has been passed on 23.04.2019 which is being challenged before this Tribunal.
Ld. Sr. Counsel for the appellant has reiterated that the Bank can withdraw the demand notice u/s. 13 (2) issued by it and there is no bar to this effect in the SARFAESI Act.
Ld. Sr. Counsel for the appellant further submitted that at the time of the withdrawal of the notice, Ld. Counsel for the respondent Mr. R. K. Salecha was also present along with Mr. Pranav, Ld. counsel and authorized representative of the Bank had submitted that he was withdrawing the demand notice and it was observed that in these circumstances, the cause of action for SA does not survive. Copy of the order was given to the Ld. Counsel for the parties. The said order dated 22. 12.2017 which is quoted earlier also is not very happily worded and runs as under:-
“Dt. 22.12.2017
Present:
Shri R.K. Salecha, counsel for appellant.
Shri Pranav, counsel for respondent bank.
Authorized representative of the bank present and represented with SK and presents withdrawn and the cause of action for SA does not survive. Liberty is given to bank to proceed afresh.
Copy of the order be given free of cost to the parties.
File be placed before the Registrar for compliance. After Compliance file be consigned to record.”
Now coming to the present impugned order, the Ld. Sr. Counsel for the appellant has submitted that demand notice issued under Section 13 (2) stands withdrawn by the Bank and subsequently a fresh demand notice under Section 13 (2) of the SARFAESI act has already been issued.
Ld. Counsel for the respondent, on the other hand, has argued that the demand Notice u/s. 13 (2) dt. 16.03.2015 could not have been withdrawn because in pursuance of the said demand notice, the Bank had reached at respondent’s premises to take the possession on 20.08.2015 and this has harmed the respondent’s reputation and the respondent was also compelled to arrange and pay an amount of Rs. 1,00,000,00/- (Rs. One Crore) to the Bank at that time with a further undertaking to pay an amount of Rs. 50,00,000/- (Rs. Fifty Lacs).
Ld. Counsel for the respondent has further submitted that as per the judgment of Hon’ble Supreme Court titled Transcore vs. Union of India (UOI) and Anr., MANU/SC/5319/2006, the demand notice crystallizes the liability and the bank, therefore, cannot withdraw the same and issue a fresh one.
Ld. Counsel for the respondent has further submitted that the impugned order passed by Ld. DRT is in accordance with law since SARFAESI Act does not allow withdrawal of the demand notice except in one situation where objections are filed under Section 13 Sub-Section 3 (a) of the SARFAESI Act and after considering the same, the Bank can withdraw the notice.
Ld. Counsel for the respondent has further submitted that perusal of the various orders passed by Ld. DRT reveals that the Bank was only intending to withdraw the demand notice but there was no intention to withdraw the same.
Ld. Counsel for the respondent has further argued that as a result of the illegal withdrawal of demand notice, the Ld. PO, DRT, Jaipur has rightly imposed a cost and compensation of Rs. 17 Lacs and the said amount also stands deposited with DRT vide the order of the Hon’ble Division Bench of High Court of Rajasthan.
Ld. Counsel for the respondent has further submitted that the Bank has filed multiple cases and has dragged the respondent institution into litigation for about seven years and, therefore, after consuming so much of time in litigation and when liability stood crystallized by virtue of demand notice, it cannot be allowed to withdraw the said demand notice issued under Section 13 (2) of SARFAESI Act and the order is, therefore, valid and suffers from no illegality or irregularity.
Ld. Sr. Counsel for the appellant, on the other hand, has relied upon two judgments of Hon’ble Hgh Courts. First one is of Hon’ble Rajasthan High Court titled Amit Prakash Gupta & Ors. vs. Bank of Baroda, MANU/RH/0603/2015, in which Ld. Counsel for the respondent Mr. R K. Salecha had himself appeared on behalf of the Bank and had withdrawn the demand notice u/s. 13 (2) SARFAESI Act. The relevant para of the judgment runs as follows:-
18........In the considered opinion of this court, on account of withdrawal of the earlier Demand Notice dated 6.10.12 issued under Section 13(2) of the SARFAESI Act, 2002 and notice dated 12.4.13 demanding possession of the secured assets having been withdrawn, the
Respondent Bank is not precluded from taking proceedings under the SARFAESI Act, 2002 afresh and therefore, the proceedings taken by the Respondent Bank by issuing the impugned Demand Notice under Section 13(2) of the SARFAESI Act, 2002, directing the petitioners to deposit the outstanding dues, quantified as aforesaid, cannot be held to be illegal or without jurisdiction for this reason.
(Emphasis supplied)
Ld. Counsel for the respondent, however, states that it was in different circumstances that the said notice was withdrawn. However, this Tribunal is of the opinion that in the said judgment, the Hon’ble High Court has categorically held that Bank is not precluded from issuing fresh notice u/s. 13 (2) of the SARFAESI Act and, therefore, contention of Ld. Counsel for the respondent cannot be accepted.
Ld. Sr. Counsel for the appellant has next relied upon the judgment of Hon’ble High Court of Calcutta titled Hotel Payel and Anr. Vs. Central Bank of India and Anr. MANU/WB/0849/2010, in which the Hon’ble High court of Calcutta has held that even during the pendency of proceedings challenging earlier notice u/s. 13 (2) of SARFAESI Act, fresh notice u/s. 13 (2) of SARFAESI Act can be issued by the Bank and earlier notice issued u/s. 13 (2) of the Act can be withdrawn by the Bank. The relevant para of the judgment runs as follows:-
“10.There is no statutory prohibition against issuing more than one notice under Sub-section (2) of Section 13. The borrower's failure to comply with the secured creditor's demand does not create any obligation of the secured creditor to exercise all or any of the rights under Sub-section (4) of Section 13; it only entitles the secured creditor to exercise all or any of the rights under Sub-section (4) of Section 13.
Though under the first Section 13(2) notice the bank was entitled to exercise rights under Section 13(4) even in the face of the changed circumstances, it decide to issue a fresh Section 13(2) notice, evidently noticing the changed circumstances. I do not find any reason to say that the authorized officer of the bank acted without jurisdiction. The decision relied on supports the proposition that a second Section 13(2) notice under the Act is permissible in law.”
Ld. Counsel for the respondent has, however, argued that as per Section 17 of the Indian Evidence Act, the withdrawal of the demand notice shows admission on behalf of the bank that an illegality has been committed by it. Section 17 of the Indian Evidence Act runs as follows:-
Section 17 in The Indian Evidence Act, 1872
Admission defined.—An admission is a statement, 1[oral or documentary or contained in electronic form], which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons, and under the circumstances, hereinafter mentioned. Comment s Admissibility is substantive evidence of the fact Admissibility is substantive evidence of the fact admitted while a previous statement used to contradict a witness does not become substantive evidence and merely serves the purpose of throwing doubt on the veracity of the witness.
This Tribunal is of the opinion that the above provision does not help the respondent for the reason that Bank has admitted the fact that wrong amount was mentioned in demand notice and it has, therefore, issued a fresh demand notice.
Ld. Counsel for the appellant has submitted that a loan of Rs. 16.5 Crores was sanctioned to the respondent against which it has not paid any amount except Rs. 3.5 Crores which was paid in pursuance of the proceedings initiated after issuance of notice under Section 13 (2) of SARFAESI Act. Ld. Counsel for the respondent, on the other hand, has refuted the said fact. However, since this fact is not to be decided by this Tribunal, no findings are being given on the same.
I have considered the rival submissions and gone through the records.
In the opinion of this Tribunal, the impugned order passed by the Ld. PO, DRT, Jaipur dt. 23.04.2019 is not in accordance with law. There is no bar in the SARFAESI Act for the bank to withdraw the demand notice and issue a fresh one. The said fact is clear from the judgments titled i) Amit Prakash Gupta & Ors. vs. Bank of Baroda (Supra) & ii) Hotel Payel and Anr. Vs. Central Bank of India and Anr. (Supra).
Perusal of the above judgments reveals that demand notice issued u/s. 13 (2) of the SARFAESI Act can be withdrawn and a fresh demand notice can be issued.
In the present appeal, it is the case of the bank that a loan of Rs. 16.5 Crores was sanctioned to the respondent. The respondent had, however, not adhered to the financial discipline and failed to pay the instalments as per the loan agreement and in these circumstances, a demand notice u/s. 13 (2) of SARFAESI Act was issued. However, since there was an error in mentioning the correct amount, the said notice was withdrawn and a fresh notice u/s. 13 (2) of the SARFAESI Act was issued. This Tribunal, therefore, finds no illegality in withdrawal of the demand notice issued by the Bank in such circumstances.
This Tribunal is further of the opinion that the contention of Ld. Counsel for the respondent that notice u/s. Section 13(2) SARFAESI Act can only be withdrawn in an eventuality as envisaged under Section 13 (3A) of the SARFAESI Act cannot be accepted for the reason that as discussed in the earlier part of the order, the demand notice can be withdrawn by the Bank if it does not contain the correct figure of debt due. Moreover, the respondent who has failed to make the payment of loan as per schedule, cannot be allowed to take any advantage of an error in the demand notice regarding mentioning of correct amount.
This Tribunal is also unable to accept the argument of Ld. Counsel for the respondent that Bank has never given any clear indication of withdrawal of the notice and it was only contemplating of doing the same, for the reason that it is clear from the order sheet dt. 22.12.2017 that demand notice under Section 13 (2) of SARFAESI Act has been withdrawn in the presence of Ld. Counsel for the parties.
In view of the above discussion, the impugned order passed by the Ld. PO, DRT, Jaipur is set aside and it is held that appellant bank could have withdrawn the demand notice issued under Section 13 (2) of SARFAESI Act and issues a fresh one.
The impugned order dt. 23.04.2019 passed by the Ld. PO, DRT, Jaipur is, therefore, set aside. The appeal stands disposed of accordingly. File be consigned to Record Room.